Tax Planning The Tax Free Life – Duty-Free Shopping Tips for Travelers Read the Article Open Share Drawer Share this:Click to share on Facebook (Opens in new window)Click to share on Twitter (Opens in new window)Click to share on LinkedIn (Opens in new window)Click to share on Pinterest (Opens in new window)Click to print (Opens in new window) Written by Jim Wang Modified Jul 22, 2019 4 min read If you travel abroad there’s a good chance that you have – or will – make purchases at duty-free shops in foreign countries. You can often get bargains in these shops that are not subject to taxes – or duties – in the host country. But be careful that you don’t mistake duty-free in the host country for duty-free in the US. Generally speaking, if you return from a foreign country with more than $800 worth of merchandise (your personal exemption) from that country, you may be subject to paying duties in the US. Here are other duty-free shopping tips for travelers. Know Your Prices Before Buying Before buying anything in the duty-free shop, you need a rough idea as to what the item will cost in a regular retail store back home. Duty free just means no or low taxes, the store may not have better prices than you would get at home. Do not assume duty free is always cheaper. If you don’t know, try to find out. A lot of international airports offer free Wi-fi so sign on with your phone and check prices at your local stores. There are a lot of items located in duty free that are not cheaper than at retail, even with taxes. Remember, if your cumulative purchases exceed the personal exemption amount in the US ($800), you will also have to add US duties on top of the purchase price. The addition might make the item so expensive that it’s not worth buying. Know Which Locations Have the Best Duty Free Shops As a rule, the best merchandise can be had in stores that have the most international travelers. Think ports, border towns, cruise ships, international airports, and locations near foreign embassies. And since these tend to be higher traffic locations, they will be more likely to offer true bargains. Be wary of buying at duty-free shops that are in more remote locations, or seem primarily established for the purpose of selling impulse items to less sophisticated buyers. If possible, ask your friends or search online to find the best duty free shops ahead of time. Higher Priced Items Offer More Savings As you’d expect, the higher-priced items have the best potential for the biggest discount. There’s only so much you can save on a $20 box of chocolates. That said, it’s probably more likely that you’ll have at least a rough idea what a high-priced item normally goes for since there are few perfect substitutes. Finally, look to items that have high duty fees, such as liquor and tobacco products, since these will represent the greatest savings. Know the Rules in the Country You Are Shopping In It’s important to understand that while there are similarities in duty-free shopping from one country to another, the specifics can be dramatically different. Make sure that you understand duty-free laws in the country that you are traveling into. Check out the website that deals with duty-free shopping in your destination country. Also check and see if there any online sources, particularly forums, where people are sharing their experiences shopping in that country. If all else fails, you can try contacting the US Embassy in that country. Know the Rules in the Country You’re Returning To If you are a US resident, do your best to keep the amount of your purchases under the allowable personal exemption ($800). Also be aware of restricted items. For example, the US limits you to just one liter of alcohol and one carton of cigarettes (200 cigarettes) per person. The US Customs and Border Patrol website can provide guidance on permissible items that can be brought into the country. Just as important, if you are traveling by air, make sure that you are aware of the guidelines of the types of products – and the amounts – that you can bring through security. The Transportation Security Administration (TSA) has strict limits on how much liquid product you can bring onto an airplane. This can include alcohol, perfume, and any aerosol products. If your merchandise exceeds TSA restrictions, it can be confiscated, and you’ll come home empty-handed. Keep a Paper Trail of Your Purchases Lastly, be sure that you keep receipts for anything you purchase in a foreign country even if it does not exceed the personal exemption. This will not only enable you to move through customs hassle free, but you’ll also have a paper trail just in case there are any questions at any point in your return trip home. And while you’re at it, be sure to keep your receipts close at hand. Having them in your wallet or handbag will be a lot more convenient in the event that you are pulled out of a security check line at the airport. The last thing you want to have to do is search through your luggage for a few slips of paper. Duty free shopping can save you a lot of money, be a great place to pick up gifts for friends, and you only need to do a little up front work to make sure you make the most of your trip! Written by Jim Wang More from Jim Wang Leave a Reply Cancel reply Browse Related Articles Self-Employed Self Employed: Living and Working Abroad? Here’s What… Investments What is a Bear Market and What Does it Mean to You? Income and Investments 4 Summer Activity Ideas That Won’t Break the Bank Tax Planning Everything You Need to Know About Property Taxes Self-Employed Self-Employed? Quarterly Tax Date Deadlines for Estimat… Income and Investments Recent Grad? Here are Four Reasons to Start Saving Now … Investments Real Estate Taxes vs. Property Taxes Retirement So You’re Thinking About Retiring One Day? Self-Employed Self-Employed Tax Tips & Summer Jobs Work So You’re Crossing State Lines?